I probably respond to 50 requests for proposals (RFPs) every year. Under the best of circumstances, it’s a challenging process. I not only have to communicate the unique value proposition my firm brings to the marketplace, but also how our products and services meet the RFP requirements__and do so in a way that is superior to competitors.
Most times, though, my greatest frustration comes from shortcomings in the actual RFP. Companies could bring more efficiency to their procurement efforts by focusing greater attention on RFP development. Beyond making the lives of my fellow sales personnel easier, the end result would be a streamlined procurement process whereby firms actually acquire the solutions they set out to buy.
Here are three recent examples to illustrate my point: One company issued a two-part RFP comprising a Word document and a spreadsheet. It required vendors to respond to all the questions in both documents or be deemed nonresponsive and eliminated. Both documents were virtual mirror images of each other, calling for bidders to respond to the same questions over and over again. Another RFP wanted vendors to develop a budget and schedule to integrate their software solution at the firm’s multiple remote operating facilities. Nowhere in the RFP did the company specify what or how many enterprise resources planning, warehouse management, or other systems were in use at any of the sites in question. And one RFP seemed to have been written by every stakeholder in the company. It was a virtual shopping list of system requirements from each department’s perspective, absent any effort to identify overlaps or contradictions.
RFPs must fully and accurately capture the company’s vision and requirements. Toward that goal, I respectfully offer one vendor’s recommendations of the basic steps to follow in RFP development:
- Appoint a leader.
- Determine the cost of not correcting the issue or business process the procurement is intended to solve.
- Explore whether an existing industry-specific solution can meet the identified need.
- Consider using a request for information (RFI) as a first step, using these guidelines.
- Issue an RFP that asks the right questions.
Step 1: Appoint a leader. Effective procurements don’t just happen. They are the culmination of a thoughtful process carried out under the guidance of a leader who understands the entire business operation and all the interrelated processes involved. This individual’s sole focus must be defining the business challenge prompting the acquisition, envisioning the solution that will address this challenge, and developing a procurement document that can concurrently identify qualified vendors.
There is nothing wrong with soliciting input from individual managers; in fact, all key stakeholders should have a voice in the process. However, the leader must be able to analyze all the input and recognize overlaps and contradictions. Further, this individual must be willing to go back to individual managers and say, “It looks like the same thing__tell me why it isn’t.”
Step 2: Estimate the true cost. There is a cost associated with acquiring new technology, just as there is a cost attached to not correcting a business problem. Companies need to calculate what it’s costing them not to have a specific technology or fix a particular business process. This provides justification for the acquisition and helps set the budgetary parameters. In particular, it identifies desired return on investment__that is, the time it takes a technology to pay for itself in terms of the benefits it brings.
Step 3: Look at existing solutions. It’s safe to say that others operating within your industry have confronted the same or similar business challenges before you. Reinventing the wheel can be costly and unnecessary. Allow a consultant who is familiar with the technology that already exists within your industry vertical to walk you through the strengths and weaknesses of solutions on the market. Find out whether there is flexibility to accommodate the unique aspects of your business problem. This narrower focus is what the RFP should address.
If no existing solution comes close to satisfying all your requirements, your familiarity with current offerings will provide a starting point for defining basic system capabilities. Moreover, it will give you a framework for judging whether vendor-devised concepts come close to satisfying your needs.
Step 4: Consider an RFI first. The RFI is a means of gathering written information about the capabilities of suppliers. It’s a great tactic for narrowing the field of vendors, which will simplify the remainder of the acquisition process and facilitate decision making.
The RFI could state the top 10 things your firm wants to accomplish and then ask vendors to respond to how well they can address them. Internally, you should set a minimum acceptable level to qualify a vendor to be included in the next phase of the procurement. If a vendor cannot meet 80% of these goals, why send an RFP? At the same time, if a vendor claims the ability to fulfill 100% of your needs, proceed with caution.
Step 5: Ask the right questions. By the time of RFP issuance, firms should have identified a leader to oversee the process, done their due diligence internally, defined the business challenge, quantified the cost not to correct the problem, and limited the competition to bidders with the needed competencies. Then, and only then, is it time to issue the RFP.
If a business follows these five steps, it is increasing its chances of successfully acquiring a solution that meets its needs. It also is demonstrating respect for the vendors participating in the process. In this way, the RFP process moves to an entirely new level, where bidders can use their expertise to offer insights and suggestions. You’ll be surprised by the outcomes attainable through mutual respect.
Wayne Slossberg is vice president of QuestaWeb, a provider of web-based global trade and logistics management solutions. He may be contacted at email@example.com.